Gifts of Money to Children

[parallel]

Well, I was going to ask for advise but I received an answer so fast that now I guess I'll just post my poem.

My sister and I have decided to give the grandchildren and those whom Dad considered grandchildren (his LONG time girlfriend's grandchildren) the gifts of money that they would have received had he lived to give them until each child reached the age of eighteen. It was Dad's wish that the money he gave go to buy savings bonds (I know... bad investment) or something similar, and indeed he gave savings bonds until the process to obtain them had become too complicated for him. I was trying to figure out the best way to give them the money without buying bonds and in a manner that would encourage investment.

Anyway, I didn't want to just send a check without something special to go with it. So... I wrote this poem and I will add a picture (as provided by their parents) of each child with "Papa" or "Grandpa Ed" as it were. Then I will obtain high quality prints on high quality stock and send these to each Grandchild along with a check for the appropriate amount.

 

[LACamper]

Nice.

Savings bonds were great at one time. As a kid I didn't appreciate them. Later, knowing they were there was great. Unfortunately, uncle sam took a nice bite out of the interest I earned on them

Open a roth for the kids. They'll appreciate it later. Or buy them their first pistol, it'll probably appreciate more than the roth!

Seriously, depending on how much money you're talking about giving them, buy them all a piece of community land somewhere where they can build a home each together. Or at least a vacation cottage so they'll stay in touch.

 

[parallel]

Land is already part of the deal (acreage in NWPA). I'm thinking about getting my financial adviser involved and see what he thinks based upon the age of each of the six children.

 

[Bunk39]

Currently, $13,000 for each child can be given from each parent per year without the child incurring any tax liability.


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[AustinBR]

Land is already part of the deal (acreage in NWPA). I'm thinking about getting my financial adviser involved and see what he thinks based upon the age of each of the six children.

Definitely talk to your FA. I know people come and talk to our FA all the time about this same subject and always leave very happy with the advice that he gives out.

 

[velociraptor]

Land is already part of the deal (acreage in NWPA). I'm thinking about getting my financial adviser involved and see what he thinks based upon the age of each of the six children.

You do not say how much is involved but unless it is a nominal amount you really need both some legal and tax advice.

I have seen too many people (kids really) **** away an inheritance on stupid things. The average inheritance is gone in no time.

This is a not too untypical story.

http://thebillfold.com/2012/05/i-spent-my-66000-inheritance-on-basically-nothing/

A trust that doles out money annually could even pay the tax on the land that you mentioned to ensure that the land is not lost.

Now on to the land. I have direct experience with land owned by multiple family members. It is a PITA because no one owns it because everyone owns it. So even though it is a significant land holding that generates income no one cares about it until the end of the year when the income is distributed. Then you had better be a CPA and make sure every penny is accounted for and distributed.

Set it all up in a trust appoint a trustee and let him/her appoint a successor.

 

[radney]

Land is already part of the deal (acreage in NWPA). I'm thinking about getting my financial adviser involved and see what he thinks based upon the age of each of the six children.

I wouldn't really spend money on a financial adviser - they tend to steer people towards investments and transactions that are profitable for them while carrying on in trade lingo that seems impressive to those outside the financial realm. Anything they can tell you is easily available on the internet or in a conversation with anyone who knows the financial world for free. Also, bonds are really terrible right now and most aren't even expected to do much more than keep up with inflation in the long run. Also, the limit per child is now 14000 dollars.

If you want to have the money invested for the long term for them there are better options available that won't cost you much to get into.

 

[parallel]

Now on to the land. I have direct experience with land owned by multiple family members. It is a PITA because no one owns it because everyone owns it.

No... it's being subdivided so that each owns his/her part outright.

Good idea about the taxes being paid from these funds.

 

[Broke]

I wouldn't really spend money on a financial adviser - they tend to steer people towards investments and transactions that are profitable for them while carrying on in trade lingo that seems impressive to those outside the financial realm. Anything they can tell you is easily available on the internet or in a conversation with anyone who knows the financial world for free. Also, bonds are really terrible right now and most aren't even expected to do much more than keep up with inflation in the long run. Also, the limit per child is now 14000 dollars.

If you want to have the money invested for the long term for them there are better options available that won't cost you much to get into.

This isn't exactly solid advice. If the guy wants to do tons of work researching investments, tax strategies and insurance then he is more than free to do that. Most people don't, so they hire us to do the heavy lifting for them. Don't discount an entire industry because you like to do it yourself or had a bad experience. I have been an FA for a long time. I've seen tons of people who thought they could do it themselves until times got bad. Then they hire me to try to fix it.

 

[AustinBR]

This isn't exactly solid advice. If the guy wants to do tons of work researching investments, tax strategies and insurance then he is more than free to do that. Most people don't, so they hire us to do the heavy lifting for them. Don't discount an entire industry because you like to do it yourself or had a bad experience. I have been an FA for a long time. I've seen tons of people who thought they could do it themselves until times got bad. Then they hire me to try to fix it.

Yeah I am with broke on this one. A good FA is going to be a lot more value than internet research. I am not discounting doing things on your own, but sometimes deferring to professionals who do that stuff everyday is really the best option.

--Sent From My Galaxy S4

 

[parallel]

I value my finacial advisor HIGHLY because the firm I'm with is more than investments ... they act as a fiduciary to keep me from mistake s that many make.

 

[RedStickChick]

I've asked my parents/relatives to either include me in trips, contribute to my 401k (once I open it in a few weeks) or gas/groceries in lieu of gifts. I don't need stuff.

 

[radney]

This isn't exactly solid advice. If the guy wants to do tons of work researching investments, tax strategies and insurance then he is more than free to do that. Most people don't, so they hire us to do the heavy lifting for them. Don't discount an entire industry because you like to do it yourself or had a bad experience. I have been an FA for a long time. I've seen tons of people who thought they could do it themselves until times got bad. Then they hire me to try to fix it.

Actually it is quite solid for the financially literate. The research isn't hard at all or nearly as time consuming as most think, but I'll agree that some don't have the time or education to do it themselves. Nothing personal at all, but I've seen people get terrible advice from "accomplished" FAs more than once (particularly on tax strategy). It's just not a necessity and carries an inherent agency theory-like problem. I've never used one nor will ever need to but a relative did from an Edward Jones adviser a couple of years ago and it was just laughable the things that he was trying to push (guess the recession hit them hard).

 

[Broke]

They will hire anyone. There is a difference. Do you know how to pull money out of a company plan using NUA? Do you know what the tax rules are for substantially equal buys? People hire us for a reason. It's just not you and that's your prerogative.

 

[radney]

I value my finacial advisor HIGHLY because the firm I'm with is more than investments ... they act as a fiduciary to keep me from mistake s that many make.

Actually, the law requires that based on the relationship you have. Any firm or FA is legally obligated to act in your best interests over their own to the extent of your business relationship. And what mistakes did they tell you that "many" make out of curiosity?

 

[radney]

They will hire anyone. There is a difference. Do you know how to pull money out of a company plan using NUA? Do you know what the tax rules are for substantially equal buys? People hire us for a reason. It's just not you and that's your prerogative.

Actually I do, but then again I am in the industry. And again, these answers can be found pretty easily.

 

[Broke]

Actually I do, but then again I am in the industry. And again, these answers can be found pretty easily.

You're right. Google can help you do anything. We provide no value. I have to run to the store to get a drill so I can do my own dental work later tonight. Catch up with ya'll later.

 

[radney]

You're right. Google can help you do anything. We provide no value. I have to run to the store to get a drill so I can do my own dental work later tonight. Catch up with ya'll later.

It's not personal, but good luck with your home surgery. Didn't mean to offend.

 

[parallel]

Actually I do, but then again I am in the industry. And again, these answers can be found pretty easily.

This is the point. You do this everyday. Therefore keeping up with all of the new taxes and regulations not to mention being able to monitor your investments to manage them properly is no big deal to you. For others like myself there simply isn't enough time in a day. Money is supposed to make life better, not consume the greatest commodity in the world... time. It's worth it to me to pay someone else to do this than to do this myself. Could I do it? Absolutely, but I choose to live my life without being a slave to money.

How about we please take this back to the topic at hand.

 

[radney]

This is the point. You do this everyday. Therefore keeping up with all of the new taxes and regulations not to mention being able to monitor your investments to manage them properly is no big deal to you. For others like myself there simply isn't enough time in a day. Money is supposed to make life better, not consume the greatest commodity in the world... time. It's worth it to me to pay someone else to do this than to do this myself. Could I do it? Absolutely, but I choose to live my life without being a slave to money.

How about we please take this back to the topic at hand.

Well unless you're day-trading or moving money between investments on a weekly basis you'll have more than enough time (even if you are there are quicker and cheaper ways to do it). It just isn't that complicated or time consuming. I think most people are overly intimidated by the language or preconceptions about money management but I believe anyone can easily manage their finances. There just isn't that much activity involved and the occasional assistance or advice is easily accessible. Being a "slave" to money management is funny and just doesn't really happen.

Also, I'm curious as to how you are being charged - is it up front or deducted?